Dechert Advises Ad Hoc Group of Bondholders in FESCO Restructuring

Dechert LLP advised an ad hoc committee of holders (AHG) in relation to Far-Eastern Shipping Company PLC and certain of its parent companies and subsidiaries (FESCO) restructuring their obligations under US $550M 8% notes due 2018 and US $325M 8.75% notes due 2020 (Eurobonds). FESCO is a leading public transportation and logistics company in Russia, which controls the Port of Vladivostok and with strategic assets and other operations spanning rail, sea liner and shipping services. 

Following over a year of negotiations between FESCO and the AHG, on June 23, 2017, the parties agreed a restructuring plan that would result in a US $547M cash payment at closing to bondholders holding US $655M of the outstanding Eurobonds (i.e. a recovery of c.83.5% plus fees). The AHG entered into a lock-up and standstill agreement to facilitate the implementation of the deal using an English law scheme of arrangement. 

The scheme of arrangement was overwhelmingly supported by the holders of outstanding Eurobonds, with 92.89% voting in favour, and on November 3, 2017, Snowden J sanctioned the scheme of arrangement. Snowden J acknowledged in particular that the scheme was appropriate and fair, that there was “sufficient connection” to England and the scheme would be recognised in the relevant overseas jurisdictions, including Russia. 

The Dechert team advising this group is comprised of London-based corporate partners Camille Abousleiman and Giles Belsey, litigation partner Adam Silver, financial restructuring associates Chris Horrocks and James Armshaw; as well as Moscow-based corporate partner Laura Brank and associates Kirill Skopchevskiy, Yuri Makhonin and Pavel Dunaev. 

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